Maytas Infra chairman resigns, cover-up feared (Lead)

January 8th, 2009 - 7:00 pm ICT by IANS  

Ramalinga RajuHyderabad, Jan 8 (IANS) The resignation of R.C. Sinha as the chairman of Maytas Infra, the infrastructure firm promoted by a son of fraud-tainted Satyam Computer chief B. Ramalinga Raju, is an attempt to cover up financial irregularities, company insiders say.Sinha, reportedly a close friend of Raju, resigned Jan 6 citing personal reasons, but a highly placed official at Maytas Infra, told IANS on condition of anonymity that it was a clear case of cover-up of financial irregularities at the infrastructure firm.

While Raju and family hold 36 percent stake in Maytas Infra, his immediate family owns 35 percent in Maytas Properties, an unlisted firm.

“It is the case of pure cover-up. There are financial anomalities in Maytas Infra as well. There is a serious financial crisis in the company and after the Satyam fiasco, there was a division in the company board, which is dominated by the immediate family of Ramlinga Raju. So there was lot of pressure on Sinha,” the official said.

According to the source, problems increased after B. Teja Raju, elder son of Ramalinga Raju, took over additional charge of chief executive of Maytas Infra, replacing P.K Madhav.

Madhav, a former director at Nagarjuna Finance, was arrested Dec 16 along with Nagarjuna Group chairman K.S. Raju on charges that the company had defrauded small depositors of about Rs.100 crore (Rs.1 billion).

Incidentally, Satyam had announced that very day it was in talks with Maytas Infra and Maytas Properties in a combined $1.6-billion takeover deal. The Maytas official said it was a move aimed at bailing out the two cash-starved companies with Satyam’s reserve funds.

He said Maytas Infra requires around Rs.1,200 crore (Rs.12 billion) over the next three years for executing the the Rs.12,000-crore Hyderabad Metro Rail and other projects awarded by the Andhra Pradesh government.

The company at present has orders valued at more than Rs.11,000 crore (Rs.110 billion) in hand, to be executed in the next three years. That includes the prestigious Hyderabad Metro project.

The state government will now check the accounts of Maytas Infra, which had raised Rs.327.45 crore (about Rs.3.27 billion) through an initial public offering and was listed on stock exchanges in October 2007. The company reported a net profit of Rs.16.84 crore (Rs.168.4 million) for the quarter ended Sep 30, 2008.

Andhra Pradesh Chief Minister Y.S. Rajasekhara Reddy, who announced a police probe into the Hyderabad-based Satyam’s operations, has also asked the state’s chief secretary to examine the functioning of the two Maytas firms.

Meanwhile, Hyderabad Metro Rail Corp managing director N.V.S. Reddy told IANS the state government will take a fresh look at the Maytas Infra contract.

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